China's Auditor-General Li Jinhua submitted an astonishing auditing report to the Standing Committee of the 10th National People's Congress (NPC) on June 23. Meanwhile, NPC vice-chairman Sheng Huaren delivered a report on the implementation of the Land Administration Law by a NPC's enforcement team.

Li's report uncovered five major problems.

First, government departments, from central to local levels, are all involved in embezzlement of state property and misuse of state funds allocated for disaster alleviation, education, Olympic and treasury bonds. Second, the lack of supervision over banks leads to a large number of illegal loans and financial malpractices. Third, tax evasion is serious and dereliction of duty is rampant in the tax collection circle. Fourth, some local governments illegally trade land and approve land projects. Fifth, private enterprises illegally get loans from banks.

The main body of malpractices, as seen from the report, is staff of government departments, officials and SOEs, followed by staff of financial institutions, private enterprises and individuals. Their targets of malpractice are state finance, tax, bank loans and land, and their major ways of "looting" state property are embezzlement, defraud and other unlawful methods.

This is only conclusion from a spot-check, which revealed ill management of some governments and poor implementation of law. The NPC standing committee has ordered thorough investigation by related departments.

Series measures taken to strengthen law enforcement

At the beginning of this year, the CPC published the regulation of internal supervision and that of punishment according to Party disciplines. Duty reporting of CPC officials is becoming a regular practice. The State Council lately called for constructing governments ruled by law in ten years and the Administrative Permission Law, which will come into effect on July 1, will further standardize executive departments which usually exceed their power.

Secondly, the central government is making every effort to reform the banking system by purchasing "questionable loans" from the Bank of China and China Construction Bank and accelerating regrouping of China Construction Bank and the Bank of Communications to get them listed at an earlier day.

Thirdly, a new round of tax reform has been launched to standardize enterprise taxations.

Fourth, China's capital market will witness in future the gradual withdrawal of state-owned funds and all questions will be solved by the market mechanism.

Fifth, setting up a nationwide, unified market system.

Sixth, tighten land approval and clear up projects misusing lands. Plans for land management tax will be solely mapped out by the central government while local authorities are no longer allowed to formulate trial plans.

Seventh, accelerate SOE reforms. The nation's bankruptcy law draft has been submitted to NPC for examination on June 21. Some 2,000 SOEs running in difficulty will withdraw from the market through "policy bankruptcy".

This astonishing audit report again displayed the central government's determination and courage to face reality and push forward reforms.